China’s real estate stimulus to aid Indian steelmakers but oversupply persists

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Subscribe to enjoy similar stories. Mumbai: China’s latest push to revive its struggling real estate sector could benefit Indian steelmakers but may still not be enough to resolve high steel imports from India’s neighbour, according to experts. “The stimulus should improve domestic steel demand in China, which would be positive for the global market," said Ranjan Dhar, director and vice-president, sales and marketing, ArcelorMittal Nippon Steel India (AM/NS).

As China’s housing market stagnated in recent years, the bulk of Chinese steel found its way into the international markets, including India, suppressing the prices of the alloy. Interest rate cuts and a reduction in upfront payment requirements for homebuyers to boost the local property market aided metal and mining stocks in India. Shares of Indian steelmakers rose as much as 5% during early trade on Tuesday before paring some of the gains.

Tata Steel Ltd, Jindal Steel and Power Ltd, Steel Authority of India Ltd and NMDC Ltd shares closed 1.9-4.3% higher. JSW Steel gained 0.72%. Also read | AM/NS India bets on high-margin, value-added steel for solar, automotive sectors “The metal and mining sector has surged today following China’s announcement of measures to boost the property market," Parthiv Jhonsa, lead analyst, metal and mining, Anand Rathi Institutional Equities, said referring to the stimulus plan.

“Historically, while a rebound in metal prices is anticipated in the short term, it has often fallen short of expectations," Jhonsa added. According to Dhar of AM/NS, even after the stimulus, Chinese steelmakers will have to curtail production for the global demand-supply balance to be restored. “China cannot continue to export 100-120 million tonnes (mt) of